2. a) Assume that you want to estimate a value for Firm Z using comparable firm data and that we have a set of comparable firms based on characteristics like sales, firm age, and products or services as shown in the table below. Considering the series of ratios given from our comparable firms, calculate an average for each ratio, multiply that average ratio by the appropriate Firm Z financial data and estimate the average share price from the different Firm Z estimates. Firm Z's financial data is $120 in Sales, $62.5 in Book Value of Equity, and $7.5 in Net Income. Ratio MV of Eq/Sales MV of Eq/Book MV of Eq/NI Firm Z Data Sales BV of Equity Net Income $ $120.0 62.5 7.5 A B C 1.5 1.25 1.0 2.0 1.5 1.6 17 25 22 Averages Average Average E(Equity)

Explain how ratio analysis in general and theDuPont equation in particular can be used bymanagers to help maximize their firms’ stock prices

Which financial ratios would you recommend to evaluate a company's solvency? Once these ratios are computed, what do you recommend comparing them to?

Using the following data for Jackson Products Company, answer Parts a through g: Evaluate the liquidity position of Jackson relative to that of the average firm in theindustry. Consider the current ratio, the quick ratio, and the net working capital (currentassets minus current liabilities) for Jackson. What problems, if any, are suggested by thisanalysis?b) Evaluate Jackson’s performance by looking at key asset management ratios. Are anyproblem apparent from this analysis?c) Evaluate the financial risk of Jackson by examining its times interest earned ratio and itsequity multiplier ratio relative to the same industry average ratios.d) Evaluate the profitability of Jackson relative to that of the average firm in its industry,.e) Give an overall evaluation of the performance of Jackson relative to other firms in itsindustry.f) Perform a DuPont analysis for Jackson. What areas appear to have the greatest need forimprovement?g) Jackson’s current P/E ratio is 7 times. What factor(s) are…